Fitch affirms Tunisia’s SCE’s rating

Published:
08 July 2010

Fitch Ratings has affirmed Tunisia-based cement producer Societe des Ciments d’Enfidha’s (SCE) National Long-term rating at ’BBB+(tun)’ and its National Short-term rating at ’F2(tun)’. The Outlook is Stable.

SCE’s ratings continue to reflect its strong business profile, including a leading local market position and a strategic vertical integration into high-margin ready mix concrete. However, SCE lacks the scale and the diversification of its international peers. The company’s position is further supported by annual increases in regulated prices and while prospects for liberalization exist the business continues to operate in a regulated market. SCE’s improved leverage and strengthened liquidity further support the ratings.

Fitch understands that the company is considering investing in cogeneration and wind generation projects in 2011/2012. If the company proceeds with these projects then related capital expenditure would weaken interest coverage and leverage although some comfort is provided by the likely state aid in support of such projects. The Stable Outlook reflects the agency’s view that credit metrics over the next 24 months should provide sufficient headroom for these projects.